Arizona regulators seek to transcend political battle over renewable energy
As utility supporters and renewable energy advocates in Arizona battle over plans to increase renewable energy, regulators are pursuing a long-term policy addressing a broad range of clean energy sources.
Clean Energy for a Healthy Arizona, supported by California billionaire Tom Steyer, a Democrat, and his environmental political action group NextGen America, are pushing a proposed constitutional amendment that would require 50 percent of the power utilities sell be from renewable sources by 2030.
Advocates need to secure 225,963 signatures by July 5 to get their plan on the November ballot.
The state’s Republican-controlled Legislature has proposed a competing amendment with the same targets. But regulators could override the mandate if it caused customers bills to increase, would cause electric system reliability issues or would adversely affect the state.
Andy Tobin, a member of the Arizona Corporation Commission said he doesn’t favor constitutional amendments in determining Arizona’s energy policy because of the possibility of error.
“The Legislature can’t change them if they’re wrong,” he said in an interview with Daily Energy Insider.
The commission is gathering comments from the state’s utilities on a more broad-sweeping approach that would require 80 percent of the power from utilities be from clean energy sources by 2050.
The plan would allow nuclear energy to be included in the mix, which would largely be from the state’s 3,900-megawatt Palo Verde nuclear generating station. “Our plan protects the diamond in the desert,” he said.
The mandate supported by Steyer and NextGen America recognizes sources such as wind, solar, biomass and hydropower, but excludes nuclear.
Tobin said the state’s utilities typically have led the energy planning process in Arizona by submitting their resource plans to the commission and obtaining regulatory approval. But when utilities suddenly announced the closure of the 2,400-megawatt Navajo coal-fired generating station after suggesting that the plant’s future was secure, an alarm went off.
“That really changed my perception of the planning process,” he said.
Unless a buyer steps in, the Navajo plant will close at the end of 2019. In that light, Tobin decided that the state needed to step up and set the direction and let the utilities follow.
Tobin, a Republican and former Speaker of the state House of Representatives, served eight years in the state Legislature.
He said his plan would be the first comprehensive energy plan for the state in more than three decades.
Policy makers for many years had been confident that the state’s energy landscape was stable. But Navajo’s closure, coupled with the decline in natural gas prices and utilities’ proposals to acquire significant natural gas generation changed that.
In addition, the state is facing the emergence of alternative technologies including utility-scale storage, plug-in electric vehicles and the decline in the price of solar panels, factors that have further highlighted the energy market’s volatility.
So the question arose: “How are we going to power Arizona and how are we going to do it well?” Tobin said.
Adopting new technologies, especially around solar and storage, will help the state achieve the long-term renewables goal.
“If we can store some of this stuff during the day and use it at night, that will help Arizona,” he said. “We’re really not that far away.”
Including electric vehicles into the plan, which are expected to be built in Arizona, will help improve air quality, he added.
Tobin said he wants to make sure the state does not become too dependent on natural gas plants.
Gas is favorable while supplies are high and prices are low but there are no assurances that prices will remain low. Regulators have placed a temporary moratorium on utilities acquiring new natural gas plants while the state develops the new plan.
Finding the right balance is essential.
“You don’t want to set your goals so high that you’re never going to get there,” he said.
The science of energy forecasting isn’t perfect, he added. But it’s essential to make reasonable forecasts of supply and demand so that utilities don’t overbuild and find themselves unable to compete in the volatile market, unable to recover their costs.
“You have to be closer than just building a new plant and then turning it off,” he said. “I don’t want that to happen in Arizona.”
By comparison, Tobin said there are currently instances of negative pricing in the market where the electricity supply is so high that California is unloading the excess to Arizona.
“Not a bad deal for Arizona,” Tobin said. “There are some cases where they’re actually paying us to take it. I don’t think that’s good business.”
Tobin said he has received thanks for developing a plan that recognizes the wide range of stakeholders in the discussion.
“This is something that everyone can agree makes sense,” he said.
